Chapter 3 (Life Insurance, Accident & Sickness Insurance & Annuity Claims-Payment of Proceeds

Question 1

Chapter 3

When a life insurance policy matures, or when the life insured dies, a claimant must satisfy certain requirements for the insurer to pay the benefit. The claimant must:

Answer 1

• Provide satisfactory evidence that the life insured has died;
• Prove their entitlement to claim the benefit.

Question 2

TRUE OR FALSE?

The claimant may be the insured, the insured’s estate, but not the designated beneficiaries whether primary or contingent.

Answer 2

FALSE

The claimant may be the insured, the insured’s estate, or one or more designated beneficiaries (either a primary or contingent beneficiary)

[Ref.3.1.1]

Question 3

TRUE OR FALSE?

When the insured person dies, the insurer usually receives notice of death from the agent, the estate executor or trustee, a beneficiary or the employer.

Answer 3

TRUE

Question 4

To satisfy the terms of a life policy, a claimant will need to establish that the identity of the person who died is the same as the life insured under the policy. They will need to provide proof.

What are some of the things they will need to satisfy the proof?

Answer 4

• That the insured person has died;
• Of the insured person’s age;
• That claimant has a right to receive the benefit;
• Of the claimant’s name, age and identity

Question 5

TRUE OR FALSE?

If a life insured disappears and remain missing for five years or more, they can be declare dead to the courts, and upon an application filed by an interested person
(i.e. a beneficiary), a Court may make an order declaring that such person has died.

Answer 5

FALSE

If a life insured disappears and remain missing for seven years or more, they can be declare dead to the courts, and upon an application filed by an interested person
(i.e. a beneficiary), a Court may make an order declaring that such person has died.

[Ref. 3.2]

Question 6

TRUE OR FALSE?

If the joint insured persons die in an accident where it is not possible to prove who died first or last, the policy may state who is presumed to have died first.

Answer 6

TRUE

Question 7

TRUE OR FALSE?

In some cases, where the insurer have trouble determining who the beneficiaries are, a provision in provincial and territorial insurance legislation allows the insurer to pay the benefit into Court.

Answer 7

TRUE

This releases the insurer from liability, and allows for the resolution of the conflicting claims to be dealt with by a system designed to deal with reviewing evidence and claims adjudication.

[Ref. 3.3]

Question 8

TRUE OR FALSE?

The insurer is obligated by provincial and territorial insurance law to pay a claim within 15 - 20 days of receiving evidence that satisfies that the claim is payable.

Answer 8

FALSE

The insurer is obligated by provincial and territorial insurance law to pay a claim within 30 days of receiving evidence that satisfies that the claim is payable.

[Ref. 3.5]

Question 9

There are at least three primary reasons why an insurer may refuse to pay a death benefit claim even to a properly identified beneficiary. What are they?

Answer 9

• Fraud, or more accurately, insurance fraud;
• Payment of a death benefit which is against public order;
• Lapse (default of payment) of the insurance policy.

Sometimes a fourth motive could be that the claim was not made in a timely fashion according to applicable provincial legislation. In that case, an insurer could invoke the limitation period

[Ref. 3.5]

Question 10

FILL IN THE BLANK!

When a beneficiary causes the death of the life insured, it is considered a ___________ or ____________ .

Answer 10

When a beneficiary causes the death of the life insured, it is considered a violation of community standards or “public order,” enabling the insurer to refuse payment.

Question 11

There are different benefits payable under accident and sickness policies. Name at least two

Answer 11

• Accidental injury or dismemberment
• Accidental death, disability, or critical illness.

Question 12

TRUE OR FALSE?

In order for the insurer to assess a claim, the claimant must provide evidence to the insurer that a claim is valid and complete a statement and have their doctor provide statements from the Medical Information Bureau (MIB)

Answer 12

FALSE

In order for the insurer to assess a claim, the claimant must provide evidence to the insurer that a claim is valid and complete a statement and have their doctor provide an attending physician’s statement (APS).

[Ref. 3.5]

Question 13

TRUE OR FALSE?

In regards to critical illness insurance, a lump-sum benefit payment will be made to the insured 15 days after the claim has been approved.

Answer 13

FALSE

In regards to critical illness insurance, a lump-sum benefit payment will be made to the insured 30 days after the claim has been approved.

Once the claim is paid, the critical illness insurance policy ceases

Question 14

TRUE OR FALSE?

In regards to critical illness insurance, if the insured dies for a reason not covered by the critical illness policy, the insurer retains the 60% of the premiums.

Answer 14

FALSE

If the insured dies for a reason not covered by the critical illness policy, the premiums paid may be refunded to the named beneficiary.

[Ref. 3.7.2.2]

Question 15

What does it mean when an immediate or payout annuities is purchased with a guarantee period?

Answer 15

This means that if the person whose life is insured dies before the insurer has made a stipulated number of payments, the insurer remains obligated to continue payments

The annuity grantee (if not the same person as the annuitant) may receive the remaining payments

[Ref. 3.8]

Question 16

TRUE OR FALSE?

Amounts accrued in an annuity contract (segregated funds or GIAs) for pension purposes are generally referred to as “locked-in”

Answer 16

TRUE

Question 17

Amounts accumulated in a pension plan may only be transferred in accordance with applicable legislation accounts such as…

Answer 17

• A LIRA;
• Another pension plan;
• For the purchase of an immediate life annuity or a deferred life annuity;
• A LIF.

Question 18

TRUE OR FALSE?

When a person receives a pension under a pension plan and his or her spouse is also eligible under the same plan, if the person dies, the benefits will become payable to the spouse, even if the spouse was not the designated beneficiary

Answer 18

TRUE

The spouse may be able to roll it into his own
locked-in plan. If there were no eligible spouse, the pension benefit will become payable to the named beneficiary. If there is no named beneficiary, the pension amount will be payable to the estate of the pensioner

[Ref. 3.8.1]

Question 19

TRUE OR FALSE?

If the pensioner had an eligible spouse, the spouse may be entitled to a collateral death benefit, usually a increased amount of the pension that was paid to the pensioner.

Answer 19

FALSE

If the pensioner had an eligible spouse, the spouse may be entitled to a survivor’s death benefit, usually a reduced amount of the pension that was paid to the pensioner.

• If there is no eligible spouse, a commuted lump-sum representing the remaining payments in any applicable guarantee (if any) period will be payable to the named beneficiary. If there is no named beneficiary, it would be paid to the estate of the pensioner

[Ref. 3.8.2]